Investment in the renewable energy sector has ground to a complete halt because of uncertainty surrounding future supports for the sector.
Government plans to introduce a Renewable Heat Incentive (RHI) next year to stimulate change from fossil fuels to renewable sources, such as forestry thinnings, for commercial and industrial heat production has resulted in a major fall-off in investment, the Irish Bioenergy Association (IrBEA) claimed.
"Any party considering biomass as an energy source has postponed purchasing decisions until clarity is given on the RHI qualifying criteria and tariff tiering/banding," IrBEA claimed.
"The industry fear is that if greater clarity does not happen until sometime late this year or early 2016, then the capacity in the sector will be further depleted and the sector will struggle to respond to market demand post the introduction of the RHI," IrBEA added.
It has called for the Department of Communications, Energy and Natural Resources (DCENR) to confirm that any eligible renewable installations, completed up to the date the RHI becomes operational, will benefit from the new support.
This so-called 'grandfathering' commitment would ensure that projects can start planning, negotiate with suppliers, get supply chains organised and commence construction safe in the knowledge that they will not be excluded from the scheme.
"The exact same issue arose in the UK in 2008/2009 when an RHI scheme was first mooted. To prevent a complete market meltdown, the then UK minister for energy and climate change made an announcement in July 2009 that any biomass projects installed from the date of his announcement would retrospectively qualify for the RHI once it was introduced," IrBEA explained.
IrBEA confirmed that it had written to Minister Alex White and his DCENR officials seeking a similar derogation to be introduced in Ireland.
The justification for an RHI is the contribution that can be made to Ireland's 12pc heat target for renewables by 2020.
The Government target is to replace about 200,000t of oil equivalent per year by 2020. This would avoid oil imports of about €120m per annum.
On current uptake trends, Ireland could be hit with EU fines of up to €500m per year for missing the 2020 targets.